DC considers imposing “Yoga Tax”

Stretch it to the limit: DC contemplates ‘yoga tax’

Does it make you want to laugh or cry?

WASHINGTON, D.C. – Should I laugh or should I cry? It’s not just the title of a 1981 song by Abba – it’s how you sometimes feel when something is either so absurd or so maddening or so something that you’re just not sure how to react. We here at DecodeDC think politics and the actions of those who play in the political arena are filled with laugh or cry moments. We hope you do to.

–UPDATED: 14:51 PM EDT 6/6/14:

After publishing this blog post, Americans for Tax Reform contacted us asking to change language in the story from saying the organization supports the “exercise tax” to saying it supports the overall tax package. We believe the support is one in the same. After we voiced this, ATR published a response saying it does not support the “yoga tax.” To clarify why we stand by the story, DecodeDC has decided to publish our entire interaction with ATR for the benefit of transparency.

You can view the emails here:

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Citizens of our nation’s capital are facing a new rule that challenges the inner sanctity of what it means to be an American—one’s right to work-out without being taxed.

Yup, you heard right. Washington DC, whose license plates read “Taxation Without Representation”, may face an affront to the umpteenth degree: a tax on their beloved gyms and workout classes. The American Revolution began over a tax to sip tea no less, so yoga classes should be no different right?

Although this story SEEMS fairly local (not a typical DecodeDC area), a tax on one is a tax on many, or in other words: what’s to keep a tax on downward-dogging in one “state” from spreading to the other 50?

Last Wednesday the DC City Council voted to tax all athletic businesses, as well as other service providers like bowling alleys, in order to raise $5 million in annual revenue for the city. The proposed service tax on fees paid to gyms has, as expected, reduced the city to one giant cacophonous gasp of shock and horror.

Local cycling studios are up in arms! DC-based gyms are sending PSAs to their members to help stop the madness! And yoga groups like the Yoga Alliance, based in Arlington, Va. are suggesting that workout classes be treated under the tax code just like food and healthcare, which are exempt from taxes as essential services.

But all jokes aside, it’s hard to deny that taxing workout classes seems counterintuitive. We live in an era where businesses incentivize employees to join gyms and charge them less for healthcare—so why is the DC government now deciding to turn the world downward dog and tax people who are just trying to fit into their skinny jeans?

“The problem is that it’s a disincentive for something that is extremely important—healthful behavior,” said Richard Karpel, president of the Yoga Alliance. “People are starting to understand that it’s essential for people to take care of themselves, and when they don’t the city and governments end up paying for people’s healthcare.”

While it’s true that working out often leads to better health, which in turn leads to fewer doctor visits and a potentially lower likelihood of the state footing patients’ bills, the so called “yoga tax” has some unlikely supporters: anti-tax vigilantes.

Grover Norquist’s Americans for Tax Reform, which is against anything tax related, actually supports the exercise tax. And so does the national Tax Foundation. The reason really is simple—the yoga tax lowers overall income taxes in the city, and that’s not something Vida Fitness is advertising in its plea to kill the bill.

And the tax on workout facilities is nothing new.

“Washington, D.C. would absolutely not be the first place to expand the list of services subjected to the sales tax as part of a comprehensive tax reform package that brings down tax rates for everyone in the process,” said Paul Blair at ATR. “It should be noted that the sales tax is being extended to a number of services, including bottled water delivery, carpet cleaning, and car washes. ATR supports the package because it will save city residents $67 million per year by lowering income taxes for low-wage workers, middle class workers, and small businesses.”

So I ask, as D.C. residents contemplate whether the yoga tax qualifies as the next Armageddon and tax experts (or experts at hating taxes) promise the tax is good in the long run, should we as a nation Laugh or Cry?

You decide.

Does the DC proposal to tax yoga studios and other athletic businesses make you want to laugh or cry?